BlackRock Files for Options-Based Bitcoin ETF Built on Premium Income

This article was first published on The Bit Journal.

BlackRock has filed a Form S-1 with the U.S. Securities and Exchange Commission for the iShares Bitcoin Premium Income ETF, a proposed product that blends spot bitcoin exposure with an options overlay designed to generate recurring option premium.

In plain terms, the idea is familiar to anyone who has watched covered-call funds in equities: hold the underlying exposure, sell call options against it, and collect premiums that can be paid out to shareholders. The filing frames the iShares Bitcoin Premium Income ETF as a way to track bitcoin’s price “generally” while adding premium income through an actively managed call-writing program tied primarily to IBIT, BlackRock’s spot bitcoin ETF.

The filing is “subject to completion,” meaning key items can still change before effectiveness, but the core mechanics are clear: the Trust’s assets are expected to consist mainly of bitcoin, IBIT shares, and cash, with cash also reflecting premiums linked to written options.

How the iShares Bitcoin Premium Income ETF aims to pay investors

The iShares Bitcoin Premium Income ETF is built around selling monthly covered call options primarily on IBIT shares, and at times on indices that track spot bitcoin exchange-traded products. In a covered-call setup, the seller collects premium up front, but gives up gains above the option strike price if the underlying moves sharply higher. That tradeoff is not subtle, and the prospectus language makes it clear the fund is not trying to be a pure “number-go-up” bitcoin vehicle.

The operational details matter because this is not a passive wrapper. The Trust is described as actively managed, it will purchase IBIT shares using cash received from authorized participants, and it will write call options to generate premium income.

The filing also outlines a target range for option writing, stating the Trust aims to write calls within a predetermined band of roughly 25% to 35% of the notional value of NAV. That range is the kind of knob investors should watch, because it influences both income potential and how much upside the fund may surrender in a rally.

The prospectus also addresses distributions directly. In the sponsor’s sole discretion, the Trust may distribute premiums or other income monthly, but it is not obligated to do so, and it may distribute more than net income earned from the options strategy. That is a practical reminder: “income” can look smooth on a calendar while the underlying exposure remains volatile.

Where it sits in the SEC process

The listing path is already on the SEC’s docket. In an order published in December 2025, the Commission instituted proceedings to determine whether to approve or disapprove Nasdaq’s proposal to list and trade shares of the Trust under rules for commodity-based trust shares. That same document summarizes the approach as writing call options primarily on IBIT, holding spot bitcoin and IBIT, and potentially using listed, flexible exchange options, or OTC options.

For market watchers, the existence of a live proceeding matters almost as much as the S-1 itself. The iShares Bitcoin Premium Income ETF is effectively asking regulators to get comfortable with a bitcoin-linked trust structure that also uses an options program, including the possibility of instruments that do not trade on a standard listed venue.

Conclusion

If approved and launched, the iShares Bitcoin Premium Income ETF would push bitcoin ETFs further into the “portfolio outcome” lane, not just price exposure.

For investors, the value proposition is simple to explain and easy to misunderstand: the premiums can soften the ride and potentially support distributions, but the cap on upside is real, and the strategy’s results will depend heavily on volatility, option pricing, and how the manager sets exposure over time.

Frequently Asked Questions (FAQs)

What is the iShares Bitcoin Premium Income ETF trying to do?
The iShares Bitcoin Premium Income ETF aims to reflect bitcoin’s price generally while generating premium income by writing call options mainly linked to IBIT.

Will it pay monthly income automatically?
The Trust may distribute premiums monthly at the sponsor’s discretion, but it is not obligated, and distributions can exceed net income from the options strategy.

Does this strategy limit upside?
Yes. Selling call options collects premium, but it can limit participation in rallies above the strike price, depending on how the calls are structured.

Glossary of Key Terms

Covered call: A strategy that holds an asset and sells call options on it to collect premium.

Call option: A contract that gives the buyer the right to buy the underlying at a set strike price before expiration.

Implied volatility: The market’s forecast of future price swings, a key driver of option premiums.

NAV: Net asset value, the per-share value of the fund’s holdings minus liabilities.

Option premium: The price paid to the option seller, often treated as the strategy’s income stream.

Authorized participant: A firm that creates or redeems ETF shares in large blocks, typically using cash or in-kind baskets.

Reference

SEC

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